Socioeconomic Status and Health: Why Is the Relationship Stronger for Older Children? NBER Working Paper.

Case, Lubotsky, and Paxson (2001) show that the well-known relationship between socioeconomic status (SES) and health exists in childhood and grows more pronounced with age. However, in cross-sectional data, it is difficult to distinguish between two possible explanations. The first is that low-SES children are less able to respond to a given health shock. The second is that low-SES children experience more shocks. This study shows, using panel data on Canadian children, that: (1) the gradient researchers estimate in the cross section is very similar to that estimated previously using U.S. children; (2) both high- and low-SES children recover from past health shocks to about the same degree; and (3) the relationship between SES and health grows stronger over time mainly because low-SES children receive more negative health shocks. In addition, researchers examine the effect of health shocks on math and reading scores. They find that health shocks affect test scores and future health in very similar ways. The results suggest that public policy aimed at reducing SES-related health differentials in children should focus on reducing the incidence of health shocks as well as on reducing disparities in access to palliative care. (Contains 17 references.) (Author/SM)